On the 22nd of March 2020 the Australian Government announced a second round stimulus package in response to the Covid-19 enhancing the first stimulus announced on the 12 March 2020, such is the anticipated impact of Covid-19 will have on the Australian economy and society.
We anticipate further stimulus and announcements all in an effort to cushion the impact.
We have summarised the different parts of the stimulus package below:
Assistance for businesses to keep employees
- Employers will receive a 100% payment (credit) on PAYG Withholding for employees lodged via Business Activity Statements (BAS) up to a maximum of $50,000.
- Eligible business that pay salary & wages will receive a minimum payment (credit) of $10,000 even if they are not required to withhold tax.
- Business will receive an additional payment (credit) equal to the above.
- To qualify for the additional payment the business must continue to be active.
- Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.
- Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 BAS.
- This assistance will be tax-free and will flow automatically through the ATO via the BAS.
Commonwealth guaranteed loans for small businesses
- The government will guarantee 50% of unsecured loans up to $250,000 per borrower, for up to the next three years for businesses with a turnover less than $50 million.
- No repayments need to be made for the first six months
- Loans are to be used for working capital.
- This will start in early April and will be for loans established prior to 30 September 2020.
- Loans will be subject to lenders’ credit assessment processes.
- Talk to your bank or financial lender for further information on what is available for you and your business.
Temporary relief for financially distressed businesses
- There will be a temporary increase in which creditors can take action.
- This will increase from $2,000 to $20,000.
- This will apply for six months.
- Also temporary relief for director from any personal liability for trading while insolvent.
Coronavirus income support supplement for sole traders, workers and households
- Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement.
- Supplement will be paid at a rate of $550 per fortnight.
- Eligible support income recipients will receive this on top of their regular payment each fortnight.
- Will be paid for the next six months.
- Available to sole traders and casual workers who meet the income tests.
- Asset testing will be waived to reduce waiting times for for access to JobSeeker and Parenting Payments.
- In addition to the $750 stimulus payment announced on 12 March 2020 and payable from 31 March 2020, a further $750 payment will be accessible to those who receive social security, veteran income support recipients and eligible concession card holders. Payment will commence from 13 July 2020.
- This new $750 payment is not accessible to those who are receiving an income support payment that is eligible for the $550 Coronavirus supplement.
Early release of Superannuation
- Eligible individuals can access early Super payments of up to $10,000.
- This can be done prior to 1 July 2020 and then again after 1 July 2020 for a total of $20,000.
- No tax is payable on these amounts and it will not affect Centrelink or Veterans’ Affairs payments.
- Available from 1 January 2020 if:
- You are working hours reduced by 20% or more
- You are a sole trader who has experienced a reduction in turnover of 20% or more
- You were made redundant
- Available to currently unemployed and and some income support payments
Mortgage Repayment Relief
- All four major banks have announced measures to provide assistance to personal and business customers, by way of
- Reduction in interest rates
- Temporary increases in overdraft facilities
- Introducing fixed interest rates
- Loan deferral arrangements from 3 to 6 months
- Provide further assistance with customers facing financial hardship
- Please contact your bank directly to ascertain what financial assistance they can provide you
Support for retirees
- The government will reduce deeming rate on assets from 1 May 2020.
- There will also be a reduction on the minimum draw down of retiree’s superannuation funds.
- The reduction applies from the 2020 and 2021 financial years reducing the minimum rates for account based pensions and similar products by 50%.
Your Business or Activity
- Further to our last Covid-19 update where we outlined some of the issue for you to consider, we further advise:
- We have already had many clients impacted by the ‘shut down’ of part of the business sectors such as cafes, hotels, suppliers to hospitality, event companies, etc
- We cannot stress enough that you need to reach out to your bank and seek financial support for at least 6 months
- Review your business model on how and what strategies can be implemented to preserve your cash-flow and reduce overheads
- Communicate with your suppliers, landlord, employees and other key stakeholders in an effort to negotiate respite from contractual obligations and conditions in order to preserve cash long enough to ride out this crises
- Review on what necessary changes needs to be done to your business to ensure your business can continue to trade through this crises and measure what the possible end-cost will be financially and the effect on the business goodwill
- Review your balance sheet – are there any surplus assets that can be liquidated to provide liquidity – are there any liabilities that can be re-negotiated
- Review your overheads and look for efficiencies
- What strategies can be implements to maintain sales/income – are there any forward orders to effect
- Review your margins on cost of goods sold
- Keep abreast of government assistance packages
- Urgently work on that plan of action and continue to monitor and revise
- As previous stated:
- Overreacting now to the current circumstances, setting plans in place, monitor those plans, make constant necessary changes is far better than under-reacting, having no plan and ending up with no business.
- Lastly and most importantly do not hesitate to contact our office to discuss your situation as some ‘brain-storming’ can go a long way in keeping your business afloat until the world returns to some form of normality
- Your health, your families health, your friends health and the community health is paramount
- Continue to follow and abide the governments health messages
- Contact Coronavirus Health Information Line 1800 020 080 if you are concerned about your well-being or your family & friends well-being
- There are government and non-government websites providing updates on Covid-19 – keep abreast of that information
Please feel free to contact our office for further information or if we can help in anyway.
Please refer to the link below for the media release from the Treasury Department: